**London**: A Dun & Bradstreet report reveals a 12.9% drop in global business optimism, highlighting challenges in supplier management. With geopolitical tensions and evolving trade policies, large firms are more optimistic than medium-sized and small businesses, as 80% report pessimism about new export orders.
A recent report by Dun & Bradstreet has revealed a decline in global business optimism as companies navigate a challenging economic landscape characterised by weak growth, geopolitical uncertainties, and evolving trade policies. The Q1 2025 Global Business Optimism Insights report, which surveyed 32 economies and was conducted in November 2024, indicated a significant 12.9% decrease in the Global Business Optimism Index compared to the previous quarter.
The report highlights that businesses are entering the new year with subdued expectations, particularly in relation to supplier management. Only 51% of businesses expressed confidence in their ability to manage supplier concentration risk, a drop from 59% in Q4 2024. This reflects a broader struggle with supplier relationships, especially amid increasing supply shortages and shifting dynamics in power between customers and suppliers.
Neeraj Sahai, president of Dun & Bradstreet International, noted that “survey respondents have a guarded outlook for the quarter ahead due to the evolving economic and political landscape that may impact how the world does business.” He further elaborated that large businesses are leveraging their economies of scale and alternative sourcing strategies, showing comparatively higher levels of optimism. In contrast, medium-sized businesses reported a 36% decline in optimism, while small businesses faced a smaller drop of 3.5%.
The decline in optimism is not limited to supply management; over 80% of the surveyed economies reported a lack of optimism regarding new export orders. Nearly half of these economies have significant trade exposure to either the United States or China, underscoring the intertwined nature of global supply chains and the risks associated with geopolitical tensions.
Moreover, the Global Business Investment Confidence Index recorded a decrease of 4.7%, and the Global Supply Chain Continuity Index deteriorated by 10.4%, reversing three quarters of improvement in this area. Only the Global Business ESG Index showed a slight increase of 2.4%, suggesting a continued commitment to sustainability despite adverse economic conditions.
Arun Singh, global chief economist at Dun & Bradstreet, pointed out that businesses are grappling with elevated costs of capital, stating that “the cost of capital is perceived to remain elevated, indicating heightened credit risk.” He also emphasised that central banks worldwide are implementing interest rate cuts in response to these challenges.
As businesses brace for ongoing supply disruptions, supply chain leaders are called to adapt. Suzie Petrusic, a senior director analyst in Gartner’s Supply Chain practice, argued that companies must recognise tariff volatility as an ongoing issue rather than a singular event. “Chief supply chain officers (CSCOs) who recognise this reality should continually evaluate opportunities to invest in strengthening their operations and attract outside investments from geopolitical actors and ecosystem partners,” she advised.
Abe Eshkenazi, CEO of the Association for Supply Chain Management, reinforced the idea that tariffs represent yet another layer of disruption that necessitates robust contingency planning across all business operations. “We also had four years of disruptions that have really required almost every company to have appropriate contingency plans from sourcing to production to logistics,” he noted.
Furthermore, Brian Whitlock, senior research director in Gartner’s Supply Chain practice, suggested that CSCOs anticipating ongoing tariff volatility must rethink their strategies. “The long-term winners will reinvent or reinvigorate their business strategies, developing new capabilities that drive competitive advantage,” he remarked. This strategic shift will likely require significant business investment and a focus on scenario planning to navigate the complexities of the modern supply landscape.
Overall, the findings of the Dun & Bradstreet report highlight the intricate challenges facing global businesses as they strive to manage supplier relationships amidst a fluctuating economic climate, underscoring the importance of adaptability and proactive strategy in the face of uncertainty.
Source: Noah Wire Services
